ETH Staking: Vitalik Believes Ethereum’s Net Return Possibly At 4% Every Year

When Ethereum moves from proof-of-work (PoW) to proof-of-stake (PoS), investors can earn passive income by staking Ethereum. As per the current proposal, Vitalik Buterin believes this staking return will be 4% per year.

The returns were calculated on a spreadsheet titled “ETH 2.0 Economics.” (ETH 2.0 refering to ETH PoS). The excel sheet takes into account the current ETH price ($200 average), minimum staking amount (32 ETH), the network fees, current supply, inflation, and ETH burned every year.

Ethereum-Staking-Excel.jpg

While discussing about the ETH tokeneconomics on Reddit, Vitalik Buterin modified the excel sheet. He changed the total ETH staking amount to 10 million, and based on this the final staking interest was obtained in percentage and USDT. Vitalik said:

I just changed the spreadsheet to show 10M staking, which I think is more realistic (and reduced the yearly fees to a more conservative 500 ETH/day). The net return is now looking like 4%.

For example: If you stake 32 ETH, you will earn 4.60% interest. Add the gas fee interest, and deduct the additional cost, to get the final net return to 3.99% per year.

To keep it simple: Stake 32 ETH to receive appromiaxtely $256. The annual profit for 992 ETH staked is around $7916 as shown:

ETH-Staking-Validator.jpg

In the traditional financial market, the nominal interest rate is anywhere between 5% to 15%. Compared to this, 4% return may seem insignificant. However, it is important to mention several parameters are assumed — and the exact profit projection can be calculated only when ETH moves to ETH 2.0.

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